Parcel carriers UPS and FedEx have selectively adopted a policy to reject bids that involve a third-party consultant. Logistics consultant Rob Martinez, president/CEO, Shipware Systems Corp. and Multichannel Merchant columnist, is observing and reporting on the new practice.
By all accounts, carrier pricing has tightened in recent months. The general rate increases (GRI) in each of the past three consecutive years have been the highest on record. And a recent Colography Group report shows surcharges are up over 125% since 2003.
It won’t stop there, either. One of the major carriers is considering custom rate increases for customers that don’t meet profitability standards. And both FedEx and UPS in April selectively adopted a policy to reject bids that come from third-party consultants (3PCs). We’re now hearing cases in which shippers have been threatened to comply with the policy or risk moving to list rates.
At least one 3PC has filed a Federal lawsuit against FedEx and UPS citing antitrust violations, intentional interference of contract and prospective economic relationships and unfair competition, in addition to other complaints. One law firm is investigating possible collusion and price fixing charges against UPS and FedEx.
Why the sudden adoption of the mysterious and austere policy against 3PCs? So far, FedEx and UPS have been mum about the policy. But the answer lies in the carriers’ renewed focus on margin improvement: Third-party consultants cost the carriers hundreds of millions annually.
I’ll be following the federal lawsuit against FedEx and UPS, and I am hopeful the carriers will be ordered to back off their policy against 3PCs. But I’m calling for the carriers to re-evaluate and rescind these policies.
More important, I’m calling for shippers to take a stand to keep the carrier’s pricing in check. Demand free market competition and the right to engage any vendor you determine delivers value. If enough of us take a stand, the carriers will rescind these policies.
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